Trusts are widely used for investment and business purposes. A Family Trust is a type of trust created to benefit persons who are related to one another by blood, friendship, or law. It can be established by a family member for the benefit of the members of the family group.
Family trusts were originally used by wealthy families to minimise tax obligations. They are now becoming very popular due to the many blended families that exist, to protect family assets from passing to non related person or to cater for drug effected or disabled members of the family that cannot manage money, so that the funds are utilised in the best possible manner.
We can assist you to set up a Family trust within days of receiving your instructions.
Some common reasons people may seek to establish a family trust:
Family trusts could provide benefits related to taxation, asset protection and estate planning and are generally considered the next most popular investment vehicle in Australia after superannuation. Family trusts can provide many advantages but when done poorly can create unnecessary risk and expense. Let us help you get it right the first time.
The trustee is responsible for managing the trust’s tax affairs, including registering the trust in the tax system, lodging trust tax returns and paying some tax liabilities.
Under trust law, trustees are:
Beneficiaries (except some minors and non-residents) include their share of the trust’s net income as income in their own tax returns. There are special rules for some types of trust including family trusts, deceased estates and super funds.
A Trustee can also be one of the beneficiaries of a Family Trust.
Depending on your circumstances there may be differences in how a Family Trust is establised.
A generic overview of the process appears below.
Like any type of legal entity there are costs involved with establishing a Family Trust.
Depending on the complexity of the Trust the initial start up cost can be approximately $2,500
In general terms the following criteria must be met:
There must be at least one beneficiary and there is no cap on the maximum number of beneficiaries.
Family Trusts must have at least one Trustee however there can be several trustees.
There are significant rules and regulations that surround family trusts. These include meeting the requirements for asset protection and the Australian Taxation Office registrations. As such accounting and auditing fees will most likely big the largest ongoing expense.
Yes, but you should be aware that tax relating to trusts can be complex. If a trustee distributes income to someone under the age of 18, they may be subject to a substantial amount of tax.
Yes, however the transfer of property you currently own into a trust will generally be classed as a sale. This can be an expensive exercise as, in addition to the appropriate sales contracts/agreements, this can incur Capital Gains Tax and stamp duty.